By JOEL PHELPS | arkadelphian.com
After listening to two opposing perspectives regarding how proceeds from Clark County’s 1/2-cent sales tax may be legally spent, members of the Quorum Court favored an ordinance written in line with the Arkansas Constitution.
An issue more than a year in the making may soon be put to bed once Ordinance 2023-14 is adopted in December. In a lengthy meeting Monday evening, justices of the peace heard what will likely be the closing arguments from polarizing viewpoints regarding whether public tax proceeds can be spent to incentivize retailers.
The saga began during a 2021 campaign to renew a 1/2-cent economic development sales tax, during which African-American congregations were told the new tax could incentivize small businesses, particularly minority-owned retail businesses. With the Black vote helping to secure the tax’s renewal, it would be up to the tax-funded Economic Development Corp. of Clark County to author rules outlining which businesses were eligible for receiving incentives.
Those initial guidelines would be written to include retailers and eventually adopted as county law; however, a change in EDCCC leadership would slam on the brakes for those awaiting to take advantage of the tax incentives, as the Arkadelphia Regional Economic Development Alliance noticed a major flaw after drafting the guidelines and an application.
The initial guidelines weren’t constitutional.
The EDCCC soon hired a Little Rock law firm that specializes in corporate finance, and under that firm’s advice the initial guidelines would become moot as the EDCCC adopted new guidelines on par with the Public Corporations Act and the Arkansas Constitution, which bar a public entity from incentivizing retailers with tax proceeds, but allow those funds to be used to create primary jobs.
Those new guidelines were provided to the Quorum Court last year, but weren’t made county law.
By the act’s definition, an economic development project includes manufacturing, production and industrial facilities; research, technology and development facilities; recycling facilities; distribution centers; call centers; warehouse facilities; job training facilities; regional or national corporate headquarters facilities; and sports complexes to host athletic tournaments.
Black leaders react to revised guidelines
With the locally authored guidelines pulled, some in the African-American community felt like the rug had been yanked from beneath them.
Black leaders have been vocal about the EDCCC’s reneging of the guidelines, speaking out at numerous public meetings.
Johnny Harris and local NAACP president Bruce Bell have been among the two most outspoken citizens. Bell has addressed the Quorum Court on various occasions. Bell sought the opinion of another Little Rock law firm, which interpreted the newer guidelines to be exclusive of small, black-owned businesses. In an 11-page letter to Bell, that firm found “no binding court precedent that has interpreted Arkansas’s constitution to prohibit local retailers from benefitting from a county economic development project or service.”
Bell would go on to address the Quorum Court on Monday, urging justices to use its authority to overtake the EDCCC’s decisions.
Justices answer to newest guidelines
However, the court would ultimately side with Shelley Short, CEO of the EDCCC, who summarized opinions provided by three separate law firms arguing that incentivizing retailers is unconstitutional.
An ordinance sponsored by District 7 Justice Jenna Scott is expected to put the issue at rest. Scott’s ordinance, which is now on its second of three readings, formally adopts the guidelines recommended by the EDCCC’s attorney.
“[These guidelines] clearly state that we want to abide by state law and the state constitution,” Scott said before the ordinance was put up for a vote.
After approving a second reading, the court had the option to suspend the rules for a third and final reading and subsequent, immediate adoption; that measure, which required a 2/3 vote of the full 11-member panel, failed when justices Vanilla Hannah (District 3) and Albert Neal (District 4) cast dissenting votes, with justices Garry “B.J.” Johns and Jimmy King absent.
The ordinance goes to its third and final reading at the court’s next meeting, in December.
